Bond Market Update: Lions, Tigers and BEARS…Oh, My!

After the longest bond market rally in history (4,571 days) from January 2000 until late July 2012, the US long bond is quickly approaching bear market territory for the first time in over 13 years.  By standard definition, a bear market is a decline of over 20% that was preceded by a rally of at least 20%.  As shown in the chart below, there have been six BOND bull markets and five BOND bear markets since 1980.  Since its peak on July 24th 2012, the long bond is currently down almost 15% … well on its way towards full bear market territory Investors need to be aware that while bonds are a core part of any diversified portfolio they can have bear markets just like stocks!  We have encountered tailwinds for bonds (meaning when rates go down, values go up) since the 1980’s when mortgages were at 14% and you could purchase 30 year treasury bonds with 15% interest.  Interest rates have been cut to zero by the Federal Reserve.  Below is another fantastic chart visualizing long bond bull markets Read on! →